Do you currently have an FHA home loan? Did you know you could refinance to a lower rate without an appraisal? Streamline refinance mortgages have been permitted by the FHA since the early 1980′s. The term “streamline” does not mean there is no cost involved as some mortgage companies would like for you to think. Streamline only refers to the documentation and underwriting needed by the lender. Streamline FHA refinance loans usually do not even require an appraisal.

There are a few basic requirement for an streamline FHA home loan including the following:

• The mortgage must already be insured by FHA
• The mortgage must be current and have no late payments pending
• The refinance must result in lowering the monthly principal and interest payments of the borrower
• The borrower can not take out any cash during this refinance

There are also a few pros and cons of a Streamline FHA refinance.

The pros of an FHA streamline refinance are as follows:

• Lower interest rate in turn means a lower monthly payment for the borrower
• Very little documentation is needed to close the loan, unlike traditional mortgage refinances
• Usually, no or very little out of pocket money is involved with the refinance
• Usually, credit requirements are much more relaxed

The cons of an FHA streamline refinance are as follows:

• No cash out option is permitted with a streamline refinance mortgage program
• You can’t refinance a second mortgage loan with this type of loan
• You will probably start back over with your loan term which will cost you slightly more on interest over the years
• Fees are often refinanced back into the loan and often disguised as “no cost” refinance loans

If you would like more information about FHA streamline refinance loans please take a look at the HUD Handbook which includes all the laws associated with this type of loan.